Trade Impact

Trump tax plans on company loans, imports worry Germans

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I mean, c'mon fellas, you're getting away with murder. Source: Reuters

Germany continues to find things it doesn’t like about US President Donald Trump’s tax and trade policies, even though many of them remain vague.

The Berlin government worries about the impact of the “base erosion anti-abuse tax,” or BEAT, in the US corporate tax reform, particularly on German banking and reinsurance firms operating there. The tax applies to intracompany loans and royalties and seeks to cut down use of these techniques to avoid tax on profit realized in the United States. Though details of the tax still have to be worked out, it isn’t likely to apply to payments for manufactured goods in a supply chain.

It is reasonably certain, however, that the tax will have a greater impact on foreign companies, prompting critics to label it “protectionist.” But European countries have also taken measures to capture more tax from activity in the country. Britain in 2015 imposed a “diverted profits tax” on earnings that companies like Google transferred abroad and the EU is considering a tax on turnover to achieve the same goal.

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